Talya Bosch: Mapping the Invisible Market

Talya Bosch, Vice President of Social Ventures at Western Union, discusses the FI 2020 Global Forum session on ‘Mapping the Invisible Market’. She details the key topics covered by the panel, noting evident areas of consensus followed by highlighting various challenges that were voiced during the session in order for full financial inclusion to be reached by 2020.

Data as a starting point – a background to Mapping the Invisible Market
With Mapping the Invisible Market, we started off looking at data that shows that financial inclusion is possible by the year 2020, which is really quite a provocative and radical concept given where we are today. We also looked at what that data shows about the key populations that we’ll need to reach. Through this, we found that two things really stood out and were discussed by the panel today:

1. Demographic window of opportunity
Right now, emerging economies have the benefit of a demographic window that is narrow and profound. There is a ‘youth bubble’ where a significnant number of people in their productive working years have relatively low old-age dependency and relatively low youth dependency.

This situation in itself has tremendous potential for society – socially, economically, politically – especially if people in this ‘bubble’ have access to financial services and can fully capitalize on this moment of potential. However, if we don’t get it right, the downside potentials are also quite sobering.

2. Impact of ageing populations in the developing world
Despite this focus on the youth bubble, even in the developing world we are seeing the demographic of ageing populations increasing more rapidly than we had anticipated.

The conversation about old-age dependency and the financial services that see people through old age is not just a conversation limited to the developed world, but is a conversation that emerging economies need to undertake in a very serious and rapid way.

Areas of consensus

1. The power of technology
Technology, particularly mobile technology, has power to reach a wide variety of people in a wide variety of places. Technology has as much potential in Peru as it has in the DRC.

2. The need for ‘bespoke scale’
Many people here at this forum want to achieve scale rapidly, in order to reach as many people as we possibly can. That said, the more that we learn about our customers, the more we also see that their needs are not all the same.

So the challenge now is not just how we achieve scale, but how we achieve customized scale, ‘bespoke scale’, so we can have full global financial inclusion in a way that is meaningful and relevant for the individual. Arguably, if it’s not meaningful and relevant for very different individuals – old, young, women, disabled – then we really haven’t achieved the vision of inclusion. This would be inclusion in name only.

3. The need for more data
In addition to the excellent data available on Mapping the Invisible Market, our panelists all talked about the need for additional data. This data would help them better understand the needs of their customers/potential customers, and help them make the case to financial services institutions that the so-called ‘vulnerable class’ – who are living on $4 to 10 per day – can be a viable market for formal financial services.

A Remaining challenge: Changing regulatory frameworks
What came out most strongly during the panelist’s discussion was the challenge of changing regulatory frameworks. For technology (and particularly mobile) to reach it’s full potential we need different regulatory schemes in different parts of the world.

For example, while regulators do have visibility into the larger commercial banks, they don’t have enough visibility into consumer banks. As Elisabeth Rhyne also pointed out in the session, you can’t take a scheme that works for a commercial bank and apply it wholesale to consumer banking, particularly at the Base of the Pyramid (BOP) and assume that that will be effective.

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Credit Suisse is a founding sponsor of the Center for Financial Inclusion. The Credit Suisse Group Foundation looks to its philanthropic partners to foster research, innovation and constructive dialogue in order to spread best practices and develop new solutions for financial inclusion.

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